SA's unsecured lending space could be at risk of the type of collapse experienced by African Bank in 2014. On the surface everything still looks relatively calm - private sector credit extension is subdued, with households deleveraging and corporations slowly starting to borrow again - but when you dig deeper, the picture becomes less rosy. Shifts in the composition of unsecured debt over the past three years point to a systemic problem that could place SA's banking sector at risk. It started in 2015 with the introduction of an amendment to the National Credit Act that introduced stricter income and affordability criteria. The purpose was to protect consumers, but it may have created a new set of problems. According to a recent "Informal Lending" report from Wonga, growth in the unsecured lending space has remained roughly in line with inflation since 2014, with the total value of unsecured credit increasing from R75.1bn in 2014 to R87.5bn in 2017. This in itself isn't a cause for c...
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